The Postcatastrophe Economy: Book Excerpt

Excerpted from THE POSTCATASTROPHE ECONOMY: REBUILDING AMERICA AND AVOIDING THE NEXT BUBBLE by Eric Janszen by arrangement with Portfolio, a member of Penguin Group (USA), Inc., Copyright (c) Eric Janszen, 2010.

By Eric Janszen

The bright side of the crisis we're currently facing is that it could serve as a political forcing function for the United States to develop its competitive muscle and eliminate its dependence on foreign borrowing and oil -- the main source of our current problems. To execute a true restructuring plan requires strong and uncompromising leaders who are willing to level with the American people, to explain the seriousness of our problems, the sacrifices we all must make to solve them, the new and better nation for ourselves and our children that we will enjoy if we do, and the disaster that awaits us if we fail to meet this challenge.

That sounds good, but how? I argue that we can nurture the seeds of a new American industrial economy -- a productive economy that generates profits from technological industries such as computers, biology, medicine, and high-technology materials -- by cultivating next-generation transportation, energy, and communications infrastructure.

In this book we call it the TECI Economy.

The U.S. economy can reindustrialize around three high-level goals. Within 10 years, this country:

will be the most energy-efficient and least energy-dependent nationin the world;

will engage the full power of American innovation to develop transportation, energy and communications infrastructure (TECI) as a platform for private enterprise to enhance long-term U.S. competitiveness, not an expensive one-off New Deal-style program that promises short-term jobs growth at the price of even higher levels of government debt;

will maintain merit but remove cost as a barrier to entry to quality education for all members of society, so that Americans have the know-how they need to compete for high-skill, high-wage jobs on a global stage.

These are the fundamentals of the TECI Economy.

To understand how we're going to get to TECI, we need a firm understanding of the economy that just collapsed around us, the one we've been living with for the past 30 years or so -- the FIRE (finance, insurance, and real estate) Economy. Many observers regard FIRE as simply the ultimate phase of capitalism. Karl Marx is the most famous among them. He referred to our economic structure as "finance capitalism." Because FIRE has been the underlying basis of the economy since 1980 or so, many adults have known no other. Their work lives have been spent earning a modest income teaching, writing software, driving a truck, managing a store, or any of 10,000 jobs that make up the productive economy, while the big money went to experts in finance. Even professionals in the rarefied income strata of the high-technology and biotech industries could not hope to earn at a level that approached that of the masters of finance on Wall Street.

An economy built on making stuff seems old-fashioned at best. The good news is that the United States still makes a lot of stuff, and exports it as well. By developing the productive parts of our economy, and diminishing the nonproductive FIRE sectors, we can grow as a newly competitive economic force in the world.